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Anyone lending in
"higher loan amount areas" should read the latest from HUD on the
probable/possible changes that will take place on October 1. "Barring Congressional action, Federal
Housing Administration (FHA) loan limits will revert back to loan limits
determined under the Housing and Economic Recovery Act (HERA) for loans insured
by FHA on or after October 1, 2011. As a result, FHA loan limits would likely
decline in 669 of the 3,334 counties or county equivalents that are eligible
for FHA insurance." FHALoanAmounts

I guess if you're in the mortgage
servicing business, you may-as-well have a dedicated team assigned to each
state, and the latest court verdicts in each state. It is nearly impossible to keep
up with the changes - just in the last 3-4 days..."Hawaii Significantly
Alters the Landscape of its Mortgage Foreclosure Process.On the
heels of South Carolina's administrative order requiring parties to a
foreclosure action to engage in loss mitigation efforts, Hawaii recently passed
a Senate bill adopting similar dispute resolution provisions and even enacting
a moratorium on certain types of foreclosures altogether...through July 1 on
all new regular non-judicial foreclosure actions, which prevents foreclosures
by power of sale to be initiated or recorded during the relevant period...In
addition, Bill 651 amends Hawaii's mortgage servicer law to declare void any
action taken by a nonexempt person operating without a license in a foreclosure
proceeding. The mortgage servicer law is further amended to require mortgage
servicers to declare their affiliations in their annual report and, for the
state's more prolific servicers, to maintain an in-state office for the dual
purpose of addressing consumer concerns and acting as an agent to accept
service on behalf of the servicer company."

Over in Oregon, a judge has made yet
another ruling in foreclosures - "U.S. District Judge Owen Panner
questioned whether big banks should be allowed to foreclose without court
supervision -- as required in 23 states but not Oregon...Panner specifically
warned of problems in cases involving the MERS... The "MERS system raises
serious concerns regarding the appropriateness and validity of foreclosure by
advertisement and sale outside of any judicial proceeding" although a MERS
spokesman said it would appeal the ruling: Oregon

One state up, in Washington, the
government there added provisions regarding lien holder requirements for
certain foreclosures. Namely, it would require "a senior beneficiary of a
deed of trust to respond to a seller's written offer that the senior
beneficiary accept the entire net proceeds of the sale when those proceeds are
insufficient to pay the full obligation owed within 120 days. The statute
applies only when the senior beneficiary receives the written offer from the
seller prior to the issuance of a notice of default. The seller must
include a copy of the purchase and sale agreement with the offer, and the
senior beneficiary's response must include either an acceptance, rejection, or
counter-offer of the seller's offer."

What has HUD and the FHA been up to
lately? Everyone should know that a 90-day moratorium on foreclosures is
automatically imposed on FHA-insured properties in Presidentially Declared
Disaster Areas. You can see those at FEMASite or by
calling a local FEMA office. HUD also offers pre-purchase training for HUD
Housing Counselors across the nation (one deadline is today for a session in
Sacramento). To register please visit: HUDReg, but for training
all over the nation go to Training.

The FDIC only shuttered one institution
Friday: First Heritage Bank, Snohomish, Washington, with Columbia State Bank
in Tacoma stepping in.

In the day-to-day flow of e-mails that I
receive, many of them are changes of e-mail address. Either someone has changed
jobs, found a job, or is leaving a job. Most of these I keep to myself,
although this one caught my eye: "The reason I had you change my email
address the other day is after 28 years in the business, I quit and today is my
last day. I'm taking the summer off, and will spend some time trying to
come up with something new to do that doesn't involve Dodd or Frank.....TIL, RESPA,
HMDA or any of the other acronyms for government torture. I am burnt
out!"

Banks are sitting on huge amounts of cash.
The reasons for this include reserves held for bad loans, the inability to find
credit-worthy lending outlets, and the continued threat of mortgage buy-backs
by government agencies. Late last week the American Banker reported that loan
repurchase requests from Fannie Mae and Freddie Mac are finally tapering off -
but that the FHA is stepping in to take up the slack. "In recent
months the government agency has been denying claims and threatening lawsuits
in unprecedented volume...the agency increasingly is forcing lenders to bear
the risk on new loans with technical defects such as having a borrower's
previous address listed incorrectly in a loan file. 'HUD is acting like any
insurance agency, if a loan goes bad and there is some deficiency, they are not
going to pay the claim,'" said one source. According to the article,
"FHA officials have blamed the decline on delays in the foreclosure process,
and said their inventory of loans in foreclosure is at a historic high of
nearly 176,000 loans." HUD can bring criminal charges against executives
responsible for overseeing compliance with FHA rules - don't do the crime if
you can't do the time. If a lender falsely certifies that loans have satisfied
FHA's requirements, it can be penalized for up to three times the amount of any
FHA insurance claim. HUD typically does not review loan files before closing
and instead relies on the certification from lenders that the loan is in
compliance with rules and requirements - similar to what investors do with
lender clients.

Lenders are still examining flipping rules.
Out in California, Mountain West Financial "is pleased to expand
its policy on VA transactions involving properties acquired and sold within 90
days of sellers' acquisition. MWF will finance properties purchased within 90
days of sellers' acquisition provided the new sales price does not exceed a 50%
increase over sellers' acquisition." There are certain restrictions, such
as a full conventional appraisal must be prepared by an approved MWF appraiser
in addition to the VA appraisal, so it is best to look at the actual
announcement.

Which way are rates going? (Perhaps more
importantly, are any LO's complaining about rates? And mortgage company owners
continue to ask low-producing agents, "If you can't originate loans with
rates down here, do you really expect to originate them if & when rates
move higher?") The economy is best described as sputtering along, grinding
higher in some areas but lagging in others. Just look at a few of the headlines
late last week: Consumer Sentiment Rises in May; Pending Home Sales Slump
11.6% in April; Consumer Spending Loses Momentum in April. ("Consumer
spending rose by the smallest gain in three months during April, government
data showed Friday, in a further sign of erosion in spending momentum due to
higher prices at the gas pump. Consumers' spending rose 0.4% last month, the
Commerce Department estimated. Meanwhile, personal incomes rose 0.4% in April.
Income has risen for seven straight months.") So rates may just chop
around these broad levels for quite some time.

Remember - today is Tuesday already!
Wednesday we'll have some ADP private payroll numbers, an ISM number, and
Construction Spending. Thursday is the usual Jobless Claims, and Friday is the
1st Friday of the month's set of employment data. ECON CALENDAR: THE WEEK AHEAD

The Navy Chief noticed a new seaman on board and barked at him, 'Get over here!
What's your name?"

"Paul," the new seaman replied.

"Look, I don't know what kind of bleeding-heart pansy junk they're
teaching sailors in boot camp today, but I don't call anyone by their first
name," the chief scowled.

"It breeds familiarity, and that leads to a breakdown in authority. I
refer to my sailors by their last names only; Smith, Jones, Baker, like that.
And I am to be referred to only as 'Chief.' Do I make myself clear?"

"Aye, Aye, Chief!"

"Now that we've got that straight, what's your last name?"

The seaman sighed. "Darling, My name is Paul Darling, Chief."

"Okay, Paul, here's what I want you to do..."

About the Author

Rob Chrisman began his career in mortgage banking - primarily capital markets - 27 years ago in 1985 with First California Mortgage, assisting in Secondary Marketing until 1988, when he joined Tuttle & Co., a leading mortgage pipeline risk management...
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